“AN INSIGHT ON THE WORKING OF JIT IN INDIAN

AUTOMOBILE INDUSTRIES”

Submitted to:
Prof. (Dr.) Manoj K Srivastava

Submitted by:
Chayanika Talukdar

March 24, 2018

 ABSTRACT
AN INSIGHT ON THE WORKING OF JIT IN INDIAN
AUTOMOBILE INDUSTRIES
The concept of Just-in-time (JIT) is an inventory strategy companies employ to increase efficiency
and decrease waste by receiving goods only as they are needed in the production process, thereby
reducing inventory costs. This method requires producers to forecast demand accurately. This
inventory supply system represents a shift away from the older just-in-case strategy, in which
producers carried large inventories in case higher demand had to be met.

A good example would be a car manufacturer that operates with very low inventory levels, relying
on its supply chain to deliver the parts it needs to build cars. The parts needed to manufacture the
cars do not arrive before or after they are needed; instead, they arrive just as they are needed.
This report examines the evolution of JIT and its implementation in the Indian automobile industry.
Various strategies, elements and important issues of JIT are discussed in detail. This report also
highlights the contribution of JIT towards improving competencies of the Indian automotive
industry. After going through a large number of articles and cases written on the subject, the JIT
implementation practices employed by manufacturing organisations all over the world have been
extensively reviewed and analysed in this report. The approaches suggested by various
researchers and practitioners have been discussed and the reasons behind failure of JIT
programmes in the automotive industry have been critically evaluated. This report also discusses
the success factors and facilitators of JIT implementation in an organisation.

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 TABLE OF CONTENT

ABSTRACT ................................................................................................................................ II
CHAPTER 1 – INTRODUCTION .............................................................................................1
1.1. Just-in-time Concept ........................................................................................1
1.2. History..............................................................................................................1
1.3. Indian Automobile ...........................................................................................2
1.4. Need and Relevance of the Study ....................................................................4
1.5. Objective of the Study .....................................................................................4
1.6. Organization of the Report...............................................................................4
CHAPTER 2 – LITERATURE REVIEW .................................................................................6
CHAPTER 3 – METHODOLOGY ..........................................................................................16
3.1. Method of Study ............................................................................................16
3.2. Data Collection Sources .................................................................................16

CHAPTER 4 – DESCRIPTION................................................................................................17
4.1 How does JIT differ from Traditional Manufacturing? .................................17
4.2 Objectives of JIT in Automotive Industry .....................................................18
4.3 JUST-IN-TIME Logistics Support for the Automobile Industry…………..21
CHAPTER 5 – CONCLUSION ................................................................................................26
REFERENCES ...........................................................................................................................27

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 CHAPTER 1: INTRODUCTION
1.1 Just-in-time Concept

Just-in-time (JIT) is an inventory strategy companies employ to increase efficiency and decrease
waste by receiving goods only as they are needed in the production process, thereby reducing
inventory costs. This method requires producers to forecast demand accurately. This inventory
supply system represents a shift away from the older just-in-case strategy, in which producers
carried large inventories in case higher demand had to be met. The purpose of JIT production is to
avoid the waste associated with overproduction, waiting and excess inventory.

The JIT concept was described by Henry Ford in his 1923 book, My Life and Work:

“We have found in buying materials that it is not worthwhile to buy for other than immediate
needs. We buy only enough to fit into the plan of production, taking into consideration the state of
transportation at the time. If transportation were perfect and an even flow of materials could be
assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials
would arrive on schedule and in the planned order and amounts and go from the railway cars into
production. That would save a great deal of money, for it would give a very rapid turnover and
thus decrease the amount of money tied up in materials.”

Advantages

Just-in-time inventory control has several advantages over traditional models. Production runs
remain short, which means manufacturers can move from one type of product to another very
easily. This method reduces costs by eliminating warehouse storage needs. Companies also spend
less money on raw materials because they buy just enough to make the products and no more.

Disadvantages

The disadvantages of just-in-time inventories involve disruptions in the supply chain. If a supplier
of raw materials has a breakdown and cannot deliver the goods on time, one supplier can shut
down the entire production process. A sudden order for goods that surpasses expectations may
delay delivery of finished products to clients.

1.2 History

JIT is a Japanese management philosophy which has been applied in practice since the early 1970s
in many Japanese manufacturing organisations. It was first developed and perfected within the
Toyota manufacturing plants by Taiichi Ohno as a means of meeting consumer demands with
minimum delays. Taiichi Ohno is frequently referred to as the father of JIT.

Toyota was able to meet the increasing challenges for survival through an approach that focused
on people, plants and systems. Toyota realised that JIT would only be successful if every individual
within the organisation was involved and committed to it, if the plant and processes were arranged

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for maximum output and efficiency, and if quality and production programs were scheduled to
meet demands exactly.

JIT manufacturing has the capacity, when properly adapted to the organisation, to strengthen the
organisation's competitiveness in the marketplace substantially by reducing wastes and improving
product quality and efficiency of production. There are strong cultural aspects associated with the
emergence of JIT in Japan. The Japanese work ethic involves the following concepts.

 Workers are highly motivated to seek constant improvement upon that which already exists.
Although high standards are currently being met, there exist even higher standards to achieve.
 Companies focus on group effort which involves the combining of talents and sharing
knowledge, problem-solving skills, ideas and the achievement of a common goal.
 Work itself takes precedence over leisure. It is not unusual for a Japanese employee to work
14-hour days.
 Employees tend to remain with one company throughout the course of their career span. This
allows the opportunity for them to hone their skills and abilities at a constant rate while offering
numerous benefits to the company.

These benefits manifest themselves in employee loyalty, low turnover costs and fulfilment of
company goals.

1.3 Indian Automobile

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 per cent
of the country's Gross Domestic Product (GDP). The Two Wheelers segment with 80 per cent
market share is the leader of the Indian Automobile market owing to a growing middle class and
a young population. Moreover, the growing interest of the companies in exploring the rural
markets further aided the growth of the sector. The overall Passenger Vehicle (PV) segment has
14 per cent market share.
India is also a prominent auto exporter and has strong export growth expectations for the near
future. Overall automobile exports grew 15.81 per cent year-on-year between April-February
2017-18. In addition, several initiatives by the Government of India and the major automobile
players in the Indian market are expected to make India a leader in the 2W and Four-Wheeler (4W)
market in the world by 2020.

Market Size
Production of passenger vehicles, commercial vehicles, three wheelers and two wheelers grew at
14.41 per cent year-on-year between April-February 2017-18 to 26,402,671 vehicles.
The auto industry is set to witness major changes in the form of electric vehicles (EVs), shared
mobility, Bharat Stage-VI emission and safety norms. Electric cars in India are expected to get
new green number plates and may also get free parking for three years along with toll waivers@.
India's electric vehicle (EV) sales increased to 25,000 units during FY 2016-17 and are poised to

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rise further on the back of cheaper energy storage costs and the Government of India’s vision to
see six million electric and hybrid vehicles in India by 2020.

Investments
In order to keep up with the growing demand, several auto makers have started investing heavily
in various segments of the industry during the last few months. The industry has attracted Foreign
Direct Investment (FDI) worth US$ 18.413 billion during the period April 2000 to December 2017,
according to data released by Department of Industrial Policy and Promotion (DIPP).
Some of the recent/planned investments and developments in the automobile sector in India are as
follows:
The only electric automaker in India, Mahindra and Mahindra Ltd, has partnered with Uber for
deploying its electric sedan e-Verito and hatchback e2o Plus on Uber platforms in New Delhi and
Hyderabad.
Mahindra & Mahindra (M & M) is planning to make an additional investment of Rs 500 crore
(US$ 77.23 million) for expanding the capacity for electric vehicles in its plant in Chakan.

Government Initiatives
The Government of India encourages foreign investment in the automobile sector and allows 100
per cent FDI under the automatic route.
Some of the recent initiatives taken by the Government of India are -
The Government of Karnataka is going to obtain electric vehicles under FAME Scheme and set
up charging infrastructure across Bengaluru, according to Mr R V Deshpande, Minister for Large
and Medium Industries of Karnataka.
The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the country for
introduction of electric vehicles (EVs) in their public transport systems under the FAME (Faster
Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme.
Energy Efficiency Services Limited (EESL), under Ministry for Power and New and Renewable
Energy, Government of India, is planning to procure 10,000 e-vehicles via demand aggregation
and has already awarded contracts to Tata Motors Ltd for 250 e-cars and to Mahindra and
Mahindra for 150 e-cars.
The government is planning to set up a committee to develop an institutional framework on large-
scale adoption of electric vehicles in India as a viable clean energy mode, especially for shared
mass transport, to help bring down pollution level in major cities.

Road Ahead

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The automobile industry is supported by various factors such as availability of skilled labour at
low cost, robust R&D centres and low-cost steel production. The industry also provides great
opportunities for investment and direct and indirect employment to skilled and unskilled labour.
The Indian automotive aftermarket is estimated to grow at around 10-15 per cent to reach US$
16.5 billion by 2021 from around US$ 7 billion in 2016. It has the potential to generate up to US$
300 billion in annual revenue by 2026, create 65 million additional jobs and contribute over 12 per
cent to India’s Gross Domestic Product.
Exchange Rate Used: INR 1 = US$ 0.015 as of March 1, 2018

1.4 Need and Relevance of the Study

The main goal is to measure value created by JIT provided to the Indian Automobile Industry. In
recent years, the demand of “reliable and admissible” performance measures have increased as
investment in Automobile has exploded.

 The purpose of the study is to know how JIT concept works.

 Pro and Cons of JIT

 How Indian Industries have implemented and Constant evaluating JIT according to
required changes.

1.5 Objective of Study

The main objective is evaluating performance of JIT in Indian Automobile Industries, which can
be categorized as follow:

 To find out the various strategies to implement JIT,

 To find out the ROI, and

 To find out the best strategy to evolve JIT in this dynamic world.

1.6 Organization of the report

The main body of the report is preceded by title & abstract giving briefly objectives of the study,
list of table and list of graphs.

 Chapter 1 gives a brief introduction about the JIT, history, Indian automobile industries, need
and relevance of the study and main objective of the study.

 Chapter 2 is all about literature review, which includes the current knowledge about JIT.

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 Chapter 3 is all about methodology. The methodology used in this study is mainly the
literature review and descriptive. It also contains sources of secondary data.

 Chapter 4 gives the summary of findings, conclusion and limitations.

The main report is followed by references, acronym & abbreviations.

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 CHAPTER 2: LITERATURE REVIEW
2.1 Maruti Suzuki

Suzuki brought a whole new manufacturing culture that included participative management, team
work, communication and information sharing, open office system, Kaizen (continuous
improvement), multi-skilling of operators, flat hierarchy, and most important of all, the concept of
Just-in-Time manufacturing. Many of these characteristics had been bruited about earlier in India
as relating to typical Japanese manufacturing culture but Maruti was the first Indian company
where the practices were actually implemented from top to bottom. The Maruti factory at Gurgaon
near Delhi can be a culture shock for a visitor. Not a wet or oily patch to be seen, no shavings or
cuttings strewn on the floor, all tools and parts and stock - in-progress neatly in place, gauges free
of dust, piping sans leaks, cover plates all in place, no peeling paint on the machines, walkways
clearly marked, adequate lighting and a clean atmosphere.
Maruti is going about the task in the typical Japanese methodical fashion of Plan, Do, Check and
Action. First, the overall targets were fixed by the top management, which was then broken down
into factors and elements and mini-projects worked out to achieve these. The eight typical wastages
at each operational point (over-production, man movement, material movement, idle time of
operator, work-in-process, machine availability, waiting time and needless processing) have been
measured by observation and even videography. The bottlenecks have been identified and a lot of
work has been done to streamline the process. In 2005, when Maruti had 6,700 employees, it was
producing at the rate of 1200 cars a day. Today, with 4,500 employees, the plant is producing at
the rate of 2,000 cars a day.
Simultaneously, the supply chain system is being honed. A delivery instruction system places
orders with the vendors for the next day's production target. Maruti is now working with an
inventory of four hours maximum for local items and six days average for imported materials. The
inventory to sales turnover ratio, on the scale of 100 in 2014-2015, is now down to 41. Maruti has
also started working with its vendors to reduce their cost of production so that its own cost of
bought outs can be reduced. It has also launched a quality enhancement scheme recently, called as
the Quality Gate system.
With so many MNC’s entering the Indian automotive market, there will be a push towards lean
production. Maruti has implemented JIT for some of its major suppliers. Some others are in the
process of doing so. There is a stress on quality in this highly competitive industry. However, the
success of JIT depends not only on the efforts of the assemblers, but also on the suppliers and on
institutional and cultural factors. The bargaining power of suppliers of some components is high,
because of capacity constraints. This makes them accept only large orders, and therefore makes it
difficult for assemblers to implement JIT.
The Company has adopted the Japanese System, JIT to achieve higher operational efficiencies and
reduce inventory carrying cost. IT improves the return on investment of a business by reducing in-
process inventory and its associated carrying costs.
To achieve JIT material supplies, the company gives preference to locally based suppliers and
encourages far distance suppliers to set up base close to Maruti Suzuki`s facilities.

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Over 76% of the company's 246 suppliers are located within 100 kms of radius have strategically
located the suppliers of bulky components such as instrument panels, fuel tanks, bumpers, seats,
etc. adjacent to the company's manufacturing facilities in the Suppliers' Park. The JIT system has
evolved over the last 25 years in the company from monthly scheduling to daily scheduling of
parts orders and finally, in 2003, to e-nagare system i.e. the release of schedules on hourly systems,
a practice that aids in maintaining less than two hours inventory of components within the
company.
The e-nagare system is successfully running today at the company and helps in maintaining the
right material inventory, at the right time, at the right place and in the exact amount without the
safety net of excess inventory, thus reducing high inventory carrying cost.
Maruti Suzuki is governed by the manufacturing excellence principles of reducing wastages,
inconvenience and inconsistency, which are imbibed from its parent company SMC, Japan.
Maruti Suzuki using best practices such as Just in Time (JIT), Kaizen (continuous improvements),
Pika Pika and Poka Yoke (mistake proof operations). The best practices are replicated in the
business process of business partners to make their operations lean and error free.
The company is efficiently interfaced with the dealers through Dealer Management System
(DMS), annual dealer interactions and reviews which help the dealers in costs savings and
customer convenience.
Optimum levels of inventory are maintained to reduce the burden of inventory carrying cost.
Higher inventory levels are corrected whenever required to them financially viable. This results in
multiplicity of efficiency across the value chain.

2.2 Bajaj Auto Ltd.

Bajaj Auto Ltd. has fully implemented JIT by using the concept of ABC/ Analysis. Bajaj Auto
slotted its suppliers into three categories and applied different purchasing strategies to each one of
them. This enabled the company to retain its lead of between 10 and 15 percent over its competitors
in the manufacture of its 2-averageThe company had divided its 3,000 - and-odd components that
go into’, ‘B’ and ‘C\
The first consisted of high value (Rs.1000 and above) items; the second, medium value (between
Rs.500 and Rs.1000) and the third, low value (below Rs.500). This classification helped the
managers to build inventories in inverse proportion to the average cost of each genre. Thus,
inventories for ‘A ‘-class items are never more than for one shift. Even then the company did not
run out of stock. This was only because of JIT. The orders were placed every week and the daily
deliveries were made. In order to ensure that the inventory-level is kept at minimum, Bajaj Auto
got rid of quality inspection of these products. Instead it became mandatory for vendors to conform
to its self-certification programme under which they guarantee the quality of their output and feed
their supplies directly the production line. 174 out of 1000 of its vendors fell in this category. Bajaj
saved to on inventory pile-ups and quality-based rejection. For B’-class items, the ordering
frequency was once a class fortnight, and the inventory-ceiling, items, the ordering cycle one week.
For was monthly, but the actual delivery was controlled by the Kanban process. Under the Kanban
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system, the requirements for the production line for a particular component are indicated visually
through cards which the suppliers use to deliver exactly as much as is required.
This was not enough just to cut down the costs. This would result in forcing the suppliers to hold
more inventories. Thus, the vendors push away from the company. Bajaj Auto, hence
communicates its tentative production-plan 3-months ahead of schedule, the semi-final is relayed
to them 45-days ahead, and the final production schedule is frozen to 30 days in advance. The
overall impact of these strategies was that the average inventories had fallen from 30 days in 1994
to 12 days.
ACHIEVEMENTS: The Company never ran out of stock average inventories had fallen down
from 30 days in 1994 to 12 days today. The application of .11 I' helped the company to possess
one of the most efficient procurement systems.

2.3 Ashok Leyand

Ashok Leyland, another leading automobile industry in India, implemented JI T and reached the
targets of reduced inventory control and high level of productivity. Almost 18 months ago. Ashok
Leyland had to allow tower inventories helplessly. The company’s profits had crashed from
Its.124.93 crores to a meagre Its.18.-11 crores. The company was fighting for its survival.
Then began Project OSCARS which stands for Optimising Supply Chain and Rationalising
Sourcing - aimed at vendor selection and development, better planning and scheduling, and
inventory control process. Until then the company was maintaining inventories worth 45 days, in
comparison to 3 lo 5 days globally. This was because the components were ordered by Ashok
Leyland on the basis of an annual production schedule which was going haywire.
Under the Project Oscar, the 5000-and-odd components which the company used were categorised
into ‘A!, ‘B’ and ‘C!. A items amounted to 75 percent of the total cost of components, ‘B! items,
18 percent and ‘C’ items, 7 percent. Based on this the company devised different delivery systems
for each category, aimed at cutting inventory holdings. For the supply of ‘A class items, a JIT
system was utilized. Under this the plant sent a JIT card, specifying the part number, quantity and
the unloading location to the supplier, who promptly despatched the required consignment directly
to the assembly line. Project OSCARS devised a funnel-planning system, covering weeks of
requirements. The broadest part- stands for the tentative requirement of the last two weeks out of
the six. The middle part of the semi frozen requirement for the middle 2 weeks and the narrowest,
part and the frozen requirement for the first two weeks. So, the vendor knows roughly when to
expect the JIT card. Simultaneously, Project OSCARs started a pull-based system on Ashok
Leyland and shop floor, where each stage produces only as much as the next stage needs. The
ultimate result of adopting JIT was high productivity and a lean supply chain. The company thus
save Rs.8.50 crores a year. There are many more companies which used JIT and other related
techniques like Business Process Re-engineering (BPR) to achieve the major targets like
elimination of waste, reduction in lead time, high level of flexibility etc. Also, one of the major
factors that make JIT superior to the traditional techniques is the geographical proximity of the
single source of supply which is utilized by many companies.

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 Ashok Leyland, one of the largest private companies in the country, had sales over Rs.6, 000
crores in 2005-06. Ashok Leyland is a part of Hinduja Group. It is also one of the largest
automobile and auto component companies in India.

 The company offers a world-class range of trucks, buses, special application vehicles and
engines, crossing millions more than 40 countries in the world. During 2005-06, the company
produced total 65,085 vehicles out of which it has exported 4,879 units. In the domestic
market, the company has sold total 56,776 units.

 The SCM project ‘Oscars Inbound’ included supplier partnership, vendor base rationalisation,
tiering of suppliers and cluster information, inventory optimisation through JIT and LCL, total
cost management, logistics initiatives, e-sourcing and global sourcing. The gains from ‘Oscars
Inbound’ are given below:

 Supplier partnership covers engineering and technical support, global market leader, and global
availability of spares, testing capabilities, improved field performance, system supplier, JIT supplies
and world-class technology.

2.4 Tata Motors

The USP is just-in-time delivery, made possible through efficient processes imbibed from Tata
Steel and Ryerson. The location of our processing plants and warehouses, and the installation of
SAP at every point forms our hardware. The software is our team of people who are highly trained
and customer focused. Their main job is to keep track of customers’ inventories and needs on a
daily basis and ensure that the company’s supply chain is balanced.

AUTO ANCILLARY:

Domestic auto ancillary companies have benefited significantly from the entry of global OEMs
through exposure to global standards and technology by forming tie-ups with foreign suppliers.
General Motors, Toyota, Ford, Fiat, Honda, Hyundai, and Volkswagen are some of the global
automakers that import critical components from India as the Indian ancillary industry has the
holistic capability to manufacture an entire range of auto components.
However, margins in the replacement market are higher than OEM market. With signs of recovery
in the auto market in the country (as it will translate into huge potential for the auto ancillary
industry), coming of the seventh Pay Commission award, favourable interest rates and a general
improvement in per capita income and prospects of better monsoon, it is expected that the auto
ancillary industry will see good growth in early double digits this year.
Moreover, the implementation of the GST from next financial year would open new prospects for
the auto ancillary companies, which usually set up their units closer to original equipment
manufacturer (OEM) facilities just to avoid VAT credit chain.
GST is expected to impact vehicle pricing, sourcing strategies, distribution costs and dealer
profitability. It is anticipated that consolidation of these facilities would be beneficial for the
overall economic efficiency of the auto industry.

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2.5 Sundaram Clyton Ltd.

SCL is part of the US$ 6.5 billion TVS group, one of the largest auto components manufacturing
and distribution group in India. SCL is a leading supplier of aluminium die castings to automotive
and non-automotive sector. Since commencing operation in 1962, SCL has achieved many
milestones and emerged as one of the preferred solution provider in machined and sub-assembled
aluminium castings.

2.6 Bosch

The Bosch Group operates in India through six companies. Bosch set up its manufacturing
operation in 1953, which has grown over the years to include 10 manufacturing sites and 7
development and application centers Bosch Group in India employs over 26,000 associates.
In India, Bosch is a leading supplier of technology and services in the areas of automotive and
industrial technology, consumer goods and building technology. Additionally, Bosch also has the
largest development centre, outside Germany, in India for end to end engineering and technology
solutions.

2.7 Exide

Since its inception in 1880, Exide is one of the most well recognised battery brands in India. Exide
has a wide distribution network and service which is continuously monitored and kept
contemporary through evolving life cycles. The brand has earned for itself a unique status by
becoming generic to the category. Studies have shown that brand Exide's unaided recall with the
target audience is more than 90 per cent.

Exide offers batteries for nearly every conceivable application, from golf carts and motorcycles to
submarines and inverters. Its technology options range from maintenance-free batteries to standard
service batteries from fully charged, off-the-shelf batteries to dry-charged ones.

Recently, the company has forayed into the area of non-conventional energy sources like solar and
wind power, backed by low maintenance batteries. Exide opened its ninth location at Bawal in
Haryana and has been commissioned to cater to the large original equipment manufacturing sector
in the North adding immense value through freshly charged 'just-in-time' supplies.

2.8 Dunlop

Dunlop Rubber was a British multinational involved in the manufacture of various rubber goods.
It was founded in 1889 by John Boyd Dunlop, who had discovered the pneumatic tyre.

DUNLOP, the foremost and prestigious brand in the tyre industry, is owned by Ruia Group since
2005 and the group is the market leader in 2/3-wheeler tyres in India. DIL caters to the needs of

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different customers. The products have been received very well in the market place in major
categories like Truck/ Bus, Farm and OTR range. Dunlop has already made inroads in different
segments like state transport undertaking’s and other large commercial houses.

The journey of the firm in India began in 1896, when Dunlop started marketing cycle tyres in
India. Dunlop incorporated its business in India as Dunlop Rubber Company (India) Limited. In
1936, DIL set up the first tyre manufacturing plant in Asia on 239 acres of land at Sahaganj, near
Calcutta. The plant, which started its production with tyres for passenger cars, cycles and animal
drawn vehicles, over the years added capabilities for tyres ranging from scooter tyres to tyres for
truck, bus, tractors and earthmovers and aircrafts. Sahaganj also produced an array of Industrial
Products.

2.9 CEAT

CEAT, the flagship company of RPG Enterprises, was established in 1958. Its predecessor Cavi
Elettrici e Affini Torino SpA was established in Italy in 1924. Today, CEAT is one of India’s
leading tyre manufacturers and has strong presence in global markets and has a capacity of over
700 tonnes per day. CEAT offers the widest range of tyres to all segments and manufactures world-
class radials for: heavy-duty trucks and buses, light commercial vehicles, earthmovers, forklifts,
tractors, trailers, cars, motorcycles and scooters as well as auto-rickshaws. CEAT enjoys a major
market share in the light truck and truck tyre market and its tubes and flaps are renowned for their
superior quality and durability.

2.10 Bharat Seats

Bharat Seats Ltd is a joint venture (JV) of Suzuki Motor Corporation, Japan, Maruti Suzuki India
Ltd and the Relans for the manufacture of complete seating systems and interior components for
the automotive and surface transport.

Incorporated in 1986, Bharat Seats has been a part of the growing automobile scene in the country
and today it occupies an eminent position in its field as it designs and manufactures products which
when viewed from the customer's perspective, provides superior value. The activities of the
company are aimed at consistent growth, consistent and steady earnings and return on
stakeholder’s investments.

2.11 JBM Group

JBM Group is a tier-1 supplier to the automotive original equipment manufacturing (OEM)
industry and provides services to esteemed clients that include Ashok Leyland, Bajaj Auto Ltd,
Fiat, Ford and General Motors, among others. The group was established in 1983 and today has a
turnover of around US$ 1.35 billion. The group has a diversified portfolio to serve in the field of
automotive, engineering and design services, renewable energy and education sectors and has an

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infrastructure of 35 manufacturing plants, four engineering & design centres across 18 locations
globally. JBM has broadened its horizons by focusing on quality delivery, solutions approach,
product development processes, flexible manufacturing systems and contract manufacturing.

The Group has alliances with more than 20 renowned companies globally, including Arcelor
Mittal, Cornaglia and Dassault Systems.

2.12 Wheels India

Wheels India Ltd is promoted by TVS Group and was established in 1962. It is presently one of
the largest steel wheel manufacturers in the world. The company had a turnover of US$ 375 million
in FY13 coming from the segments of cars/UVs, commercial vehicles, tractors, single piece wheels
and construction and earth mover wheels. The company also manufactures air suspension kits for
trucks and buses. With over 15 per cent of its turnover coming from exports, particularly from the
construction and earth mover equipment segment, the company is truly a global player in the auto
components industry.

Wheels India is a partner to various global original equipment manufacturers (OEMs) such as
Ford, Hyundai, Tata, Caterpillar, John Deere, Komatsu, Hyundai Heavy Industries, Case New
Holland, Leyland, Tafe, and Suzuki. The company has seven manufacturing facilities situated
across five Indian states.

2.13 AVTEC

Avtec Ltd is one of the largest independent manufacturers of 'Powertrains and Precision
Engineered Products' in India. It is a part of CK Birla Group - a leading global business house with
over 20,000 employees and a combined turnover of US$ 1.6 billion. Although the CK Birla Group
has been in the automobile components business for a long time, Avtec Ltd, as a new entity, was
founded in 2005.

Today, Avtec has earned a formidable reputation in domestic and international markets, for
manufacturing products such as engines and transmissions and intricate components like cylinder
head, cylinder block, crank shaft, cam shaft, cam rod and high precision transmission gears for
automotive and off-highway segments. The company's design and manufacturing capabilities are
focused on providing niche powertrain solutions for passenger cars, SUVs and commercial
vehicles in the automotive segment; and construction and mining equipment, material handling,
oil field, railways and windmill application in the off-highway segment.

2.14 Lucas TVS

Lucas TVS was established in 1961 as a joint venture (JV) between Lucas UK and TV Sundram
Iyengar and Sons (TVS), India to manufacture automotive electrical systems. Presently, it is the

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leader in auto electrical in India with 50 years of experience in design and manufacturing. Four
out of five vehicles rolled out daily are fitted with Lucas TVS products.

Lucas TVS manufactures auto components for all range of vehicles, consisting of products such
as starter motors, alternators, wiper motors, ignition devices, horns and blower/fan motors. Its
customers include major automobile manufacturers in the country such as Tata Motors, Eicher
India, Ford India, Force Motors, Mahindra and Mahindra, etc.

2.15 Minda Industries Limited

Minda Industries Limited (MIL) is the flagship company of the UNO MINDA, NK Minda Group
and is among the leading manufacturers of automotive components in India. MIL is an integrated
automotive manufacturing group having four subsidiaries – two jointly controlled entities and two
associates.

The company started its operations with automotive switches and diversified into several new
product lines. It has a diversified product portfolio comprising switches, horns, CNG/LPG kits,
lighting, batteries, fuel caps, and renewable and energy efficient devices, among others.

MIL has 14 manufacturing facilities across seven locations in the country. The company exports
its products to more than 19 countries across the globe. With quality certifications like ISO 14001,
BS OHSAS 18001:2007, ISO/TS 16949:2009, ISO/TEC 17025, MIL – Switch Division is serving
end markets in India, US, Europe, Japan, ASEAN and Brazil.

2.16 Anand Group

Established in 1961, Anand Group has successfully partnered with leading global automotive
engineering frontrunners. It operates two business verticals: automotive solutions in India and a
chain of luxury hotels – Sujan Luxury Hotels. It is an industry leader in automotive solutions and
recorded a sales turnover of Rs 60 billion (US$ 997.01 million) in 2013.

The Group owns 19 companies spread across 51 locations and 11 states of the country. Sujan
Luxury Hotels represent the company’s foray into hospitality.

The Group provides the widest range of solutions to the Indian automotive engineering and
manufacturing industry. It is among the country's leading manufacturers of automotive systems
and components, which makes it the India’s leading Original Equipment Manufacturer (OEM)
supplier. It has a solid presence in the Indian Aftermarket with some of its flagship brands being
market leaders. Anand Group supplies to every major vehicle and engine manufacturer in the
country.

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2.17 Sona Koyo Steering System

Sona Koyo Steering Systems Limited (SKSSL), established in 1985, is the flagship company of
the Sona Group, and the largest manufacturer of steering systems for passenger car utility vehicles
and light commercial vehicles in India.

As part of its globalisation strategy, SKSSL has acquired a position in Fuji Autotech France, SAS,
which is the 4th largest steering system supplier in Europe. Via Fuji Autotech, the Sona Group
footprint extends to Eastern Europe and South America.

Sona Koyo has entered into a technical and financial collaboration with JTEKT Corporation, Japan
(formally known as Koyo Seiko Co Ltd) – the largest producer of passenger vehicles' steering
systems in the world.

Sona Koyo's customers include major vehicle manufactures in India such as Maruti Suzuki,
Toyota, Hyundai, Tata Motors, Mahindra & Mahindra, General Motors and Mahindra–Renault.
Independently, as well as through its network of overseas joint-venture partners, the company
exports high-quality precision products to USA, Europe and Japan.

2.18 Bharat Forge Limited

Bharat Forge Ltd (BFL), the Pune-based Indian multinational is a technology driven global leader
in metal forming having transcontinental presence across eight manufacturing locations. It serves
several sectors, including automotive, power, oil and gas, construction and mining, locomotive,
marine and aerospace.

Part of the Kalyani Group – a US$ 2.5 billion conglomerate with a global workforce of 10,000 –
BFL today has the largest repository of metallurgical knowledge in the region and offers full
service supply capability to its geographically dispersed marquee customers, from concept to
product design, engineering, manufacturing, testing and validation.

The world's largest forging company with manufacturing facilities spread across India, Germany
and Sweden, Bharat Forge manufactures a wide range of high performance, critical and safety
components for the automotive and non-automotive sectors. It is India's largest manufacturer and
exporter of automotive components and a leading chassis component producer in the world.

2.19 Amtek Limited

The Amtek Group, headquartered in India, is one of the largest integrated component
manufacturers in India with a strong global presence. It has also become one of the world’s largest
global forging and integrated machining companies. The Group has operations across Forging,
Iron and Aluminium Casting, Machining and Sub-Assemblies.

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The Group is comprised of the listed corporate entities Amtek Auto, Amtek India, Ahmednagar
Forgings, JMT Auto and other subsidiaries. Amtek India standalone has reported a sales turnover
of Rs 480.56 crore (US$ 77.04 million) and a net profit of Rs 54.28 crore (US$ 8.7 million) for
the quarter ended June 2013. The Company's product portfolio consists of a range of components
for 2/3 wheelers, cars, tractors, light commercial vehicles (LCV), heavy commercial vehicles
(HCV) and stationary engines. With the infrastructure and technology platform developed over 25
years, the Group is well positioned in the Indian auto and non-auto component markets.

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 CHAPTER 3: METHODOLOGY
3.1 METHOD OF STUDY

To meet the requirement of stated objective the study require a methodology is explained below:

 Source of Data has been collected through secondary mode from Websites.

 Method of collection is secondary data.

 Specification of statement – to find out how JIT works and how to Implement with respect
to changes.

3.2 DATA COLLECTION SOURCES

The research is done on the basis of secondary data collected from following sources:

 JIT Concept, Investopedia

https://www.investopedia.com/terms/j/jit.asp

 Operation Management Book

 https://www.ibef.org/industry/india-automobiles.aspx

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 CHAPTER 4: DESCRIPTION

4.1 How does JIT differ from Traditional Manufacturing?

In traditional manufacturing we try to predict what the customer will want and we will create a
forecast (or guess) against which we will produce our products. We will also try to produce those
products in large batches as the belief is that will make machines and processes more efficient,
especially if those machines require a long time to setup. This will typically result in long lead
times through our processes, huge amounts of Work in Process (WIP) stocks and also large
quantities of finished goods stocks that have not yet been ordered by our customers. This is what
many now call “Just in Case” manufacturing.
If the customer does order something that is not in our current stocks they will either have to wait
many weeks or even months for the product to be manufactured or work will be hurried through
the system by progress chasers causing a huge amount of disruption to the production schedule.
These systems are often run by Manufacturing Resource Planning (MRP2) programs that will try
to schedule each and every process within the facility. These software packages will seek to control
every step and everything requires careful and often complex planning.
A Just in Time system on the other hand will seek to use simple visual tools known as Kanbans to
pull production through the processes according to what the customer actually takes. It massively
reduces the amount of stock held and will reduce lead times by a significant amount, often from
weeks to just a few hours or days.
While Just‐in‐Time (JIT) manufacturing has emerged as one of the major tools to enhance
manufacturing competitiveness, no attempt has been made to develop a reliable and valid
measurement instrument for empirical research in JIT. Without such an instrument, generalization
beyond the immediate sample is difficult or misleading. We have proposed a JIT framework and
developed a valid and reliable instrument with 16 summated scales for dimensions that capture
essential aspects of JIT useful in assessing its impact in manufacturing in automobile industry. In
addition, we discuss in detail the interactive nature of JIT practice. And, we propose a step‐by‐step
approach to reliability and validity testing. Four JIT practices (equipment layout, pull system
support, supplier quality level) are identified as major contributing factors to JIT performance.
Tools used in just in time:
Kaizen - Continuous improvement - Basis for the JIT philosophy.
Cellular Work Flows - Mowing operations together for efficiency - Eliminates wasteful
transportation. Parts are started and finished in the same cell. Facilitates one-piece flow
productions and visual control is enhanced.
One-Piece Flow Production - Parts are produced in batches of one - Defective parts are limited
as well as inventory and WIP. Exposes waste, and Real-time feedback from processes.
Standard Work Concepts - Every process must have a standard procedure, take time*, and
standard WIP. Provides the foundation for future improvements. Work procedures eliminate
second-guessing. Standard WIP provides for continuous flow of work.

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The 7 Wastes - Waste arising from overproducing, waiting, transporting, processing, unnecessary
stock, unnecessary motion, and producing defective goods. Recognition of waste is critical to
improvement.
Make it Ugly - Bringing problems to everyone’s attention by visually displaying them. Example:
inventory that is "in the way" instead of in the warehouse. - Reduces the "out of sight, out of mind"
mentality.
"Just Do It" - Doing and improving rather than "over planning". Focus on continuous
improvement. Eliminate the waste of too much planning.
The 5 Ss - Concepts of neatness, orderliness, cleanliness, and work -place discipline. Seiri, Seiton,
Seiso, Seiketsu, Shitsuke. - Visual control is enhanced. Provides the foundation for future
improvements.
Kanban Inventory - A card system that describes inventory instructions. Example: In
Supermarket stocking a void on the shelf is a signal to the clerk to replenish the stock. - Facilitates
production of the necessary parts only.
Visual Control - Clear, visual control instead of explanation. Examples: Methods of parts storage
and production status scoreboards. - Signals shortages. Highlights idle workers and other wastes.
Management can focus on the abnormal and eliminate detailed reporting.
Single-minute Exchange of Die - Concentration on opportunities to eliminate waste in setup and
changeover. Convert internal setup (stop machine to setup) to external setup. - Setup waste is
targeted.
Poke yoke - Design self-checking elements in production processes. Make processes "fool proof".
- Enhances the goal of quality at the source.

4.2 Objectives of JIT in Automotive Industry

 No inventories are stored: so, one of the just in time objective is to reduce or eliminate the
storage of inventories. In the old manufacturing production system, raw material is purchased,
products or goods are produced, and stores. This concept cost a lot of money to store not only
raw material, but also store finish goods. Also, the production process is quite slow as the
company might not be seeking the new way to improve the process. Therefore, JIT is trying to
overcome these problems. The productions are process only if there are orders from customers.
 No material is purchase: In implementing the JIT, the material is not going to purchase if there
are no productions. Not like the old system, the raw material is purchase as the result of
production forecasting demand and productions. The company old the old system normally
has the low networking with suppliers and most of raw material required during the years are
purchased in advance and spend a lot of money and space on storing the raw material and
taking care of them. Just in Time System is trying to overcome this by making sure that there
is the goods relationship with supplier and the raw materials are purchase only if there is
production. However, this meet this objective, the company that implement Just In time need
to build the perfect relationship with its suppliers or, in order words, suppliers could access to

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 the company system to understand about the demand. Otherwise, suppliers might not be able
supplies the raw material on time and as require. This is the warning point for company that
wish to implement this system.
 Improve the Production System: Another main of objective Just in Time Production systems
is it is helping the company to improve the production process in the Company.
1. Reduction in the order to payment timeline; cash, as they say is king in business. Many
businesses will suffer with cash flow problems as they will often have to purchase large
amounts of raw materials prior to manufacturing and subsequent payment by the customer.
Often this gap is many months. Through implementing JIT, you are able to considerably
reduce that time period.
2. Reduction in Inventory costs; one of the main aims with any JIT implementation is to
improve stock turns and the amount of stock being held. Personal experience has seen
reductions of more than 90% stock in some industries. Along with the reduction in the
stock come many other associated benefits.
3. Reduction in space required; by removing large amounts of stock from the system and
moving processes closer together we will often see a significant reduction in the amount of
floor space being used. Results from 100’s of projects run within companies in the UK
through the Manufacturing Advisory Service saw average reductions of 33% for simple 5
day implementation projects.
4. Reduction in handling equipment and other costs; if you don’t have to move large
batches there is less need for complex machinery to move them and all of the associated
labor and training.
5. Lead time reductions; one of the most significantly impacted areas is that of the time it
takes for products to flow through the process. Instead of weeks or months most JIT
implementations result in lead times of hours or a few days.
6. Reduced planning complexity; the use of simple pull systems such as Kanban, even with
your suppliers, can significantly reduce the need for any form of complex planning. With
many implementations the only planning is the final shipping process.
7. Improved Quality; the removal of large batch manufacturing and reduction in handling
often results in significant quality improvements; often in the region of 25% or more.
8. Productivity increases; to achieve JIT there are many hurdles that must be overcome with
regards to how the process will flow. These will often result in productivity improvements
of 25% upwards.
9. Problems are highlighted quicker; often this is cited as being a negative aspect of JIT in
that any problems will often have an immediate impact on your whole production process.
However, this is the perfect way to ensure that problems are highlighted and solved
immediately when they occur.
10. Employee empowerment; one requirement of JIT as with most other aspects of Lean
manufacturing is that employees are heavily involved in the design and application of your
system

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 Requirements for Implementing Just in Time

Just in Time is just one of the pillars of a lean manufacturing system and as such it cannot be
implemented in isolation and without a firm foundation on which to build. Trying to reduce batch
sizes without tackling setup times for instance cannot be done. The following are some of the
things that must be implemented for JIT to be able to work:

 Reliable Equipment and Machines; if your machinery is always breaking down or giving
you quality problems then it will frequently manifest in big issues with any JIT flow. The
implementation of Total Productive Maintenance is required to ensure that you can rely on
your equipment and to minimize the impact that any failures have on your processes.
 Well-designed work cells; poor layout, unclear flow, and a host of other issues can all be
cleared up by the implementation of 5S within your production. This simple and very easy
to implement lean tool will make a significant improvement in your efficiencies all by
itself.

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  Quality Improvements; an empowered workforce that is tasked with tackling their own
quality problems with all of the support that they need is another vital part of any lean and
JIT implementation. Setting up kaizen or quality improvement teams and using quality
tools to identify and solve problems is vital.
 Standardized Operations; only if you know how each operation is going to be performed
can you be sure what the reliable outcome will be. Defining standard ways of working for
all operations will help to ensure that your processes are reliable and predictable.
 Pull Production; Just in time does not push raw materials in at the front end to create
inventory (push production), it seeks to pull production through the process according to
customer demand. It achieves this by setting up “supermarkets” between different
processes from which products are taken or by the use of Kanbans which are signals (flags)
to tell the previous process what needs to be made.
 Single piece Flow; the ideal situation is one in which you will produce a single product as
ordered by the customer. This for some industries is not immediately possible but should
always be your end goal. To achieve this, you will need to work on reducing batch sizes
significantly through the use of Single Minute Exchange of Die (SMED) which seeks to
significantly reduce the time taken for any setup. It will also often require the use of smaller
dedicated machines and processes rather than all singing all dancing mega machines.
 Flow at the beat of the customer; the demand of your customer is often referred to as
your Takt time. You need to ensure that your cells and processes are organized, balanced
and planned to achieve the pull of the customer. This is achieved through Heijunker and
Yamazumi charts.

4.3 JUST-IN-TIME Logistics Support for the Automobile Industry

CONDITIONS BEFORE JIT

Transportation-Key issues of transportation before JIT include plant locations, the role of
transportation, deregulation, and transportation regulation. The placement of plants changed as a
result of the implementation of JIT. During the 1970s, first-tier suppliers as well as major
automobile factories were all centrally located. As a result of the proximity between suppliers and
factories, transportation was not a vital concern in terms of time and cost however, as factories
gradually relocated, logistics became an important factor in the automotive industry’s success.
Efficient transportation methods were critical to the effective JIT process. For years, the
automotive industry relied internally for functions such as purchasing and transportation. Society
assumed that products would move from their production site to the consumer with little difficulty.
What began as a concentration of automobile assembly plants located in and near Michigan
quickly changed to assembly plants located throughout the United States, Mexico, and Canada. It
was during the 1980s that this decentralized approach proved to be very expensive and ineffective
with less than-truckload shipments. Plants were experiencing backlogs of trucks at their docks for
several hours. These delays caused a diversion of key resources away from the automobile
assembly plants’ car business. Deregulation of the major modes of transportation drastically
affected motor, rail, airline, and water carriers. Deregulation removed constraints on motor

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carriers’ products, services, and prices, resulting in an increased number of motor carriers, thus
providing a higher level of competition.

Supplier Relationships and Purchasing Methods before JIT -methods of purchasing and inventory
management were in many ways different from those now practiced. Before JIT was implemented,
purchasing was considered a transaction of immediate need. Supplier relationships lasted no longer
than the time required fulfilling a given purchasing contract. A long-term relationship was
considered by many companies to be an annual buy with periodic releases to the supplier. Multi-
year buys were commonly seen only in the aerospace and defence industries. A vendor’s history
of service and product quality were important considerations when reviewing contract bids, but
when it came time to issue a new contract, the bottom line was very often the bottom line. Contract
bidding was traditionally considered the method of choice for fostering competition and thus
keeping prices at their lowest. Multiple bids were solicited to customer-prepared specifications
with little or no input to those specifications from the potential suppliers. As a result, specifications
may have been unnecessarily limiting by excluding commercially standard items or were more
likely to have been inflexible in the selection of materials, tolerances, finishes, and manufacturing
methods. When supplier experience was utilized, it was typically in relation to the contract at hand
and did not necessarily extend to the finished product as a whole. Additionally, it was not unusual
for bids to result in contracts being awarded to multiple suppliers to protect against unreliable
quality or delivery.

The Present Environment

This section describes the importance of JIT and how industry leaders are dealing with the present
and the future for transportation. Supplier relationships and how purchasing and quality will play
a leading role in the future will also be discussed.
Transportation -Transport innovation is the execution portion of JIT purchasing. It is the physical
linkage between the inside and the outside processes. Of all the aspects of JIT, transportation is
probably the one most subject to misconceptions. Typically, transportation has been viewed by
manufacturing industries as “putting products on a truck, train, plane, or bus.” But JIT transport
issues include every step required to move material from the hand of the last value adder at a
supplier location to the hand of the first value adder at a customer location. JIT transport is a
process that starts at a supplier location and ends at a customer location. Transport innovation
requires that all three parties, the supplier, the carrier, and the customer, work together more
closely than ever before. That means transport partnerships have to be forged, just like supplier
partnerships. There will be fewer carriers than there are today; each will be a single source for a
“family” of businesses that will be treated as a part of the operation, as though they were “in-
house” carriers. Advancements in technology have fostered many changes in transportation
logistics. One example of transport innovation resulting from these advancements is global
positioning systems (GPS). By synthesizing satellite tracking, computer, communications,
wireless and Internet technologies, GPS offers fleet managers a powerful tool to increase
productivity and achieve major cost savings and operating efficiencies. Global positioning systems
provide fleet operators with the ability to display the location of vehicles on their PC screens using
high-quality, street-level detail maps, cargo and vehicle security, route optimization, and driver
monitoring. GPS providers are utilizing the Internet as a communication medium, offering low

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cost solutions for companies wishing to monitor vehicle fleets around the country from a central
location. A basic GPS functions with a compact vehicle mounted remote unit that picks up GPS
signals from orbiting satellites and tracks the vehicle position to within 10 meters. This remote
unit relays its position to the fleet office computer via cellular phone or digital radio signal. With
a message display unit in the cab, interactive messaging capability is also provided. Fleet managers
can track any vehicle’s location on a zoom able map display on their personal computer screens.
This display gives them remote control and monitoring over functions such as locking and
unlocking cargo doors, turning alarms on or off, and monitoring sensors such as temperature.
These systems can also provide extensive reporting, including idle time, delivery/stop, speeding,
event history, route animation, and other tracking reports
Supplier Relationships and Purchasing Methods- Just as the JIT environment has affected
transportation providers, requiring them to change and streamline their methods of operation, and
make long-term investments in technology, JIT purchasing in today’s automotive industry requires
that manufacturers and suppliers form long-term relationships with the intent that they become
permanent. Simultaneously, the number of suppliers is streamlined so that each is the sole provider
of a particular item or items, with purchase agreements issued with durations of years. These
changes result in strong bonds between the manufacturers and suppliers, with each becoming
thoroughly dependent on the other for survival and prosperity. Each supplier recognizes that any
failure on its part in quality, quantity, or timeliness could potentially result in the shutdown of the
customer and thus all suppliers, itself included. However, with that large responsibility comes the
benefit of stable production and assured income. In this environment, major automobile
manufacturers team with logistics specialists to manage material flow. This move results in
reduced less-than-truckload costs and reduced transit times and it eliminates the receiving function
at the dock. All these actions combine to reduce inventories. As a result of JIT implementation,
the quality of delivered goods has improved to near 100%, as no extras are available to replace
defective items. Typically, statistical process controls are implemented by the supplier thereby
drastically reducing the number of unacceptable parts produced and effectively eliminating final
inspections. Quality standards are set by the customer’s quality engineers, who also work with the
supplier to resolve quality concerns. Shipping damage is nearly eliminated. Materials come
directly from the supplier to the customer and are not repeatedly transferred between transport
mediums, greatly reducing the opportunity for damage to occur. The quantities of parts delivered
to the customer must be exact. Shipments of plus or minus 10% are no longer acceptable because
the parts are ordered on a strict as-needed basis with little or no buffer stocks. Delivery of finished
goods to the customer must be on a strict schedule to ensure their availability for assembly
operations. Again, because buffer stocks have been eliminated or reduced dramatically, these
deliveries must be of small quantities arriving within hours or minutes of the need for final
assembly. Timing is just as important as the quality and quantity; there is little or no margin for
error. Methods used to meet those requirements are varied. In some cases the parts manufacturing
facility is constructed at or near the final assembly plant, allowing small deliveries of parts to be
made in smaller, cheaper vehicles, with greater control over timeliness. Where local manufacturing
is not feasible, other methods are used including dedicated trucks or closed loop transportation in
which delivery trucks make stops at various suppliers on a predetermined schedule, simultaneously
returning empty shipping containers and taking on new loads for scheduled delivery to the
assembly plant. Disposable packaging can be replaced with reusable containers and racking
compatible with assembly line use, eliminating the costs of removing and disposing of packaging
materials and simplifying and speeding the loading and unloading processes. With no receipt

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inspections required, materials are now unloaded at or near the final point of use in the assembly
plant, eliminating the additional steps required for distribution from a centralized receiving point.
Costs associated with equipment used to speed the delivery process, such as specially configured
trucks, containerization, and unloading equipment, are offset by the associated improvements in
efficiency. The stringent demands of the JIT manufacturing process require maintaining
communication between the supplier and customer at the highest levels. Notifications of
disruptions, quality problems, or engineering changes are immediate, and resources are shared to
resolve technical difficulties.

Advantages
Less space needed: With a faster turnaround of stock, you don’t need as much warehouse or storage
space to store goods. This reduces the amount of storage an organisation needs to rent or buy,
freeing up funds for other parts of the business.
Waste reduction: A faster turnaround of stock prevents goods becoming damaged or obsolete while
sitting in storage, reducing waste. This again saves money by preventing investment in
unnecessary stock and reducing the need to replace old stock.
Smaller investments: JIT inventory management is ideal for smaller companies that don’t have the
funds available to purchase huge amounts of stock at once. Ordering stock as and when it’s needed
helps to maintain a healthy cash flow. All of these advantages will save the company money.

Disadvantages
JIT unfortunately comes with a number of potential disadvantages, which can have a significant
impact on the company if they occur. Risk of running out of stock: By not carrying much stock, it
is imperative you have the correct procedures in place to ensure stock can become readily
available, and quickly. To do this, you need to have a good relationship with your supplier(s). You
may need to form an exclusive agreement with suppliers that specifies supplying goods within a
certain time frame, prioritising your company. JIT means that you become extremely reliant on
the consistency of your supply chain. What if your supplier struggles with your requirements, or
goes out of business?
Can you get the products quickly from somewhere else? Lack of control over time frame: Having
to rely on the timeliness of suppliers for each order puts you at risk of delaying your customers’
receipt of goods. If you don’t meet your customers’ expectations, they could take their business
elsewhere, which would have a huge impact on your business if this occurs often. More planning
required: With JIT inventory management, it’s imperative that companies understand their sales
trends and variances in close detail. Most companies have seasonal sales periods, meaning a
number of products will need a higher stock level at certain times of the year due to higher demand.
Therefore, you need to factor that into planning for inventory levels, ensuring suppliers are able to
meet different volume requirements at different times. If run properly, JIT inventory management
is seen as one of (if not the) best ways of managing inventory.

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While it is not without risks, it has significant rewards, and is ideal for those who are able to plan
carefully in advance and build strong relationships with suppliers.

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 CHAPTER 5: CONCLUSION

Just-in-time manufacturing can be a positive influence on a company. However, there are many
risks associated with attempting to implement JIT manufacturing techniques. When looked at it
appears to be a very simple, quick, and easy thing to do. In reality it is a very complicated technique
that takes long term commitment and an initial cost with no guarantee of success. If implemented
successfully it would eliminate waste, make the company more productive and
more efficient. It does this through shorter transportation and increased communication.
Although there are many companies that are successful, many companies are not. Even though
here are enormous risks many still consider implementing JIT for it many advantages. To
summarize, there is a great need for transition from traditional manufacturing to Just-in-Time
manufacturing, but several aspects of the industry are not very conductive to JIT implementation
as there are many constraints. However, by taking appropriate action, i t should be
possible to move smoothly towards implementing an efficient JIT system.

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 REFERENCES

 JIT Concept, Investopedia

https://www.investopedia.com/terms/j/jit.asp

 JIT Book

 Harvard case study

 Automobile Industry,

https://en.wikipedia.org/wiki/Automotive_industry_in_India

https://www.investopedia.com/terms/j/jit.asp

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